A Canadian non-profit jumpstarting business in South
African townships
through microlending, microfranchising
and asset based community development.
Canadian Charitable Registration Number (86418 8420 RR0001).

Third MicroFranchising Launch: Trade Show and Workshops – 21 – 23 May 2014 at Vaal University of Technology Sedibeng Campus, South Africa

The third MicroFranchising Launch: Trade Show and Workshops will be held 21 – 23 May, 2014 at the Vaal University of Technology at the Sebokeng Campus in the Vaal Triangle, again led by The Townships Project. Our partners in the 2014 MicroFranchising Launch include Emfuleni Local Municipality, Randwater Foundation, Sedibeng Municipality, South African Department of Trade and Industry and Vaal University of Technology.

Franchising is the most successful business model on earth. Franchising takes a successful business and replicates it using consistent, well-defined processes and procedures, creating a brand while procuring inputs, recruiting and training franchisees, and continuously improving the business model. Micro-franchising (MFO) focuses on creating franchises, which are affordable to the poor (cost approx. 3x per capita GDP) and, in the context of The Township Project’s involvement, provide life-enhancing products and services which are affordable at the bottom of the economic pyramid.

Micro-franchising potentially offers the most successful business model on earth to the poor, bringing affordable business ownership and training, reliable systems and supply links as well as family employment, building assets and income. Ownership is key as it motivates hard work and ensures accountability. It changes the incentives that drive bribery and fraud. Franchising tends to be a family affair involving all family members, teaching financial literacy, while at the same time building a family asset that can be sold when necessary.

Micro-lending networks are filled with people who have already proven to be reliable borrowers and entrepreneurs, so they act as a natural “farm team” for franchisors looking for reliable franchisees. It makes economic sense to offer micro-loans to the poor to purchase products and services that are both life-enhancing and replace those currently purchased out of subsistence income. For instance, if a solar home energy system with electric lights and a cell-phone and radio battery recharger can be supplied for the same cost as two years’ worth of candles and kerosene (plus interest), it makes economic sense to advance a two year loan for it, as it will enhance the health, safety, learning and work hours of a family, although not strictly speaking a business investment. If the family is already finding the money to pay for the less efficient products, it will likely find the money to pay for dramatically improved products. Thus micro-franchises and micro-lenders may evolve a symbiotic relationship in some instances, each one strengthening and providing markets for the other. This relationship can transform inefficient spending into efficient spending by changing the products being purchased for the same amount of cash: from candles and kerosene, to electric lights and battery rechargers.

The Townships Project was the initiator of the MicroFranchising Launch: Trade Show and Workshops held in August 2011 in Khayelitsha, Cape Town, and in October 2012 in Soweto, Johannesburg. It has built partnerships with the Department of Trade and Industry in South Africa as well as a number of corporations as a result of those efforts. The report below outlines some of the recent developments.